January 16, 2015
BY Erin Krueger
Penford Corp. has released financial results for the first quarter of fiscal 2015, reporting its industrial ingredients division reported sequential improvements for the past five quarters in gross margin and operating income. The division’s gross margin expanded to $7.2 million, up by $5.8 million from last year’s first quarter, on favorable ethanol market dynamics, the lower cost of physical corn, the growth in specialty bioproducts and the reduction in depreciation expense with the increase in estimated useful lives that occurred as of May 1, 2014. Penford owns a 45 MMgy ethanol plant located in Cedar Rapids, Iowa.
According to information released by the company, it will not host an investor call to discuss first quarter financial results due to the recent announcement of the definitive merger agreement with Ingredion Inc., which was announced in October. Under that agreement, Ingredion will acquire all the outstanding shares of Penford for $19 in cash per share. According to information released in October, the transaction is valued at approximately $340 million in the aggregate and has been approved by the boards of directors for both companies.
Advertisement
Advertisement
An 8-K form filed with the U.S. Securities and Exchange on Jan. 9 indicates Penford reported total sales of $103.64 million for the quarter, down slightly from $109.25 million during the same period of 2014. Ethanol accounted for $22.05 million of the first quarter 2015 sales, up slightly from $22.02 million reported for the same period of the prior year.
Penford reported to income of $4.41 million for the quarter, including $2.98 million from the industrial ingredients division. In comparison, the company reported $1.64 million in income during the first quarter of last year, including $2.04 million from the industrial ingredients division.
Advertisement
Advertisement
Within the SEC filing, Penford explained that while ethanol sales for the first quarters of 2015 and 2014 were comparable, a 10.5 percent increase in volume during the first quarter of this year was offset by a decrease of 9.5 percent in the average unit selling price per gallon.
The company also reported that the industrial ingredient division’s operating income of $3 million during the first quarter of this year grew $5 million over the previous year’s first quarter due primarily to an improvement in gross margin. Gross margin increased $5.8 million to $7.2 million from $1.4 million the previous year. The margin improvement is attributed to favorable ethanol market dynamics of $3.9 million, the lower cost of physical corn of $1.8 million, and several other factors.
Neste and DHL Express have strengthened their collaboration with the supply of 7,400 tons (9.5 million liters) of neat, i.e. unblended, Neste MY Sustainable Aviation Fuel to DHL Express at Singapore Changi Airport starting July 2025.
CoBank’s latest quarterly research report, released July 10, highlights current uncertainty around the implementation of three biofuel policies, RFS RVOs, small refinery exemptions (SREs) and the 45Z clean fuels production tax credit.
The U.S. Energy Information Administration maintained its forecast for 2025 and 2026 biodiesel, renewable diesel and sustainable aviation fuel (SAF) production in its latest Short-Term Energy Outlook, released July 8.
XCF Global Inc. on July 10 shared its strategic plan to invest close to $1 billion in developing a network of SAF production facilities, expanding its U.S. footprint, and advancing its international growth strategy.
U.S. fuel ethanol capacity fell slightly in April, while biodiesel and renewable diesel capacity held steady, according to data released by the U.S. EIA on June 30. Feedstock consumption was down when compared to the previous month.